Budget 2011 and green taxes

 

The Environmental Audit Committee last week held the first session of the inquiry into the Budget 2011 and environmental taxes. The committee heard evidence from the Institute of Fiscal Studies, the Green Alliance and The Policy Studies Institute. The Tax Payers Alliance, Aldersgate Group and the Federation of Small businesses were also among the contributors. Given the Coalition’s commitment to raise a greater proportion of tax revenues from green taxes, those giving evidence were asked to suggest what they thought to be the appropriate/desired target level, with responses suggesting figures of at least 10% by the end of this parliament and a long term goal of up to 20%. This led to further discussion over the public’s perception of green taxes and what action the government can take to prevent environmental taxes being viewed negatively by tax payers as revenue raising exercises. Solutions put forwarded included greater adoption of revenue neutral schemes and the use of tax structures designed to encourage behaviours viewed as ‘positive’, rather than curtailing ‘negative’ behaviours. When asked to comment on the sustainability credentials of the budget many drew attention to the issue of fuel duty. Whilst contributors noted that the cut in duty may have little impact given recent oil price rises, they stressed that moves by government should be viewed in context with cuts to bus services and rising rail fares giving a signal which does not show commitment to low carbon alternative transport and reduced fossil fuel dependency. Views were also expressed that the changes to planning regulation were the most environmentally damaging part of the budget, and that much greater clarity would be needed as to the government’s ‘presumption in favour of sustainable development’. The deadline for written submissions of evidence now closed but the inquiry is still ongoing with any further oral evidence sessions still to be announced.